The Advisory, Conciliation and Arbitration Service – commonly known as ACAS – is often the first port of call when trying to resolve conflicts in the workplace between an employer and employee prior to legal action.

ACAS is an independent UK body whose remit is to improve the working lives of employees and organisations through employment relations. They provide advice to employers on improving working practices and will offer help to employees to resolve legal disputes such as perceived breaches of employment contract.

An Employment Contract, whether verbal or written, is a legally binding agreement between an employer and employee. However, there may be times when either party believes the other party to be in breach of contract, precipitating dispute.

An employee who feels their employment contract has been reached, for example, being asked to work more hours without prior agreement, should always first check their employment contract, then try to gain resolution with their employer or line manager. Only when this isn’t possible, should an employee think about bringing in ACAS ahead of any legal action.

How ACAS can help

Resolving the dispute by recourse to the courts or employment tribunal can be cost and time-consuming, leading to mediation by ACAS as an attempt to prevent legal recourse when agreement cannot be reached. This process of conciliation is free but requires agreement by both parties to undergo the process.

The role of an ACAS mediator will be to show both employer and employee the legal issues behind the breach of employment contract, show what procedures will take place if the employment contract dispute goes to tribunal, show any possible grounds for settlement between the parties, and help to devise a new binding legal agreement should settlement over the employment contract dispute be possible.

As a neutral in the dispute, the mediator’s sole focus is brokering agreement between employer and employee in the breach of employment contract dispute.

Benefits of Using ACAS to Broker Agreement

There are a number of reasons why breach of employment contract disputes can be better served by undergoing conciliation with ACAS.
• Conciliation can save time and money for both the employer and employee. Legal disputation over employment contracts requires building cases and defences, and outcomes are by no means certain for either party, with one potentially having to foot a costly legal bill
• Using ACAS proves to be less stressful than fighting a legal case for both parties.
• A negotiated outcome by ACAS could be to the satisfaction of both parties, with a new agreement to the employment contract being drawn up. Such amicable agreements are rare with legal disputes, which tend to have a winner and a loser
• Both parties still have an element of control in resolving the dispute. This control is lost when recourse is taken to a tribunal or a court.
• Timely resolution of the employment contract dispute. Sometimes a mediator can affect an agreement over the employment contract dispute after a few meetings, saving a long, drawn-out legal dispute. These meetings may be done separately or with both parties present, but both provide speedier outcomes than otherwsie would have been possible.

Statutory Rights and Employment Contracts

All employees in the UK have certain employment rights enshrined in law. These are known as Statutory Rights, and it’s important for employers and employees to be aware of these rights to prevent or resolve any legal infringements.

Some Key Statutory Rights

• A statement in writing of the terms of employment

• An itemised statement of pay, including gross pay, net pay, any deductions, and amount   and method of payment.

• Compensation payment for redundancy

• Not to face unfair dismissal

• Not to face discrimination because of gender, race, sexual orientation, disability, age,   religion, religious belief, and membership or non-membership of a trade union.

• Maternity leave, maternity pay, and no unfair treatment due to pregnancy

• Notice of termination of contract

• Healthy and safe place of work

• Statutory sick pay in accordance with certain conditions

Employment Contract Rights

Employers and employees can agree to many rights beyond statutory legal rights, but an employer must never offer less than statutory legal rights. There exists automatic entitlement to legal rights regardless of the conditions written into the employment contract. If an employee thinks their legal rights are being violated, then they should seek advice to verify the violation before approaching their employer.

Employment Contract and Probationary Periods

It is often standard for an employee to start their employment on a period of probation. But what is less frequently understood, is while an employer can offer fewer rights than a fully instated employee, they cannot offer less than the statutory rights of any employee. And, any details of the differing rights of the probation period still need to be communicated verbally or in writing to an employee to be binding.

Summary

Whether on a probationary period or in normal employment, knowledge of your automatic entitlement to statutory rights regardless of Employment Contracts is vital for every employee. It is also vital knowledge for every employer to ensure their Employment Contract isn’t inadvertently violating any statutory rights.

Changing an Employment Contract

Employment contracts are not fixed in stone but can be changed by either an employer or employee. Any change is conditional on agreement being reached by both parties.

Such agreement can be brokered informally after a conversation when neither party objects to the changes mooted. Alternatively, they may have to be brokered more officially via negotiation. It is vital for both employer and employee to prevent problems down the line by following correct procedures.

Why Employers Change Employment Contracts

There are many reasons why an employer may wish to change an employment contract: adverse trading conditions may lead to a need for longer working hours, or the ending of agreed pay incrementals; government legislation may require a redrawing of working conditions; or an employer may wish to re-locate or restructure their business. Regardless of motivation, changes typically necessitate an amendment to working hours, pay levels, duties and location.

How Employers can Change Employment Contracts

As previously stated, agreement is imperative to any redrawing of employment contracts.  The employer must advise the employee of planned changes and explain the rationale for these changes.  This consultation takes place either with employees directly or with their representatives such as a trade union or staff body.

They are also obliged to listen to any alternative suggestions from employees designed to meet the needs that are dictating changes to the employment contract. An employer cannot enforce the changes without agreement from the employee, however, failure to agree can lead to the employer terminating contracts and offering new contracts.

Depending on how this was handled, an employee can consult ACAS or their representative body to see whether this offer constitutes unfair dismissal.

Why Employees Change Employment Contracts

Ultimately, employers have more power when it comes to changing employment contracts unless they have violated statutory rights, in which case, employees have legal due process on their side. However, it is still possible for some employees to broker change.

How Employees Change Employment Contracts

They need to organise a meeting with their employer, attended by themselves or a representative, and detail the change desired, along with the rationale for that change.

The employee cannot demand change so it’s entirely due to the discretion of the employer, although lobbying for changes, by, for example, trade unions or staff bodies, can lead to industrial conflict in the workplace, and then an employer will decide whether the pressure being brought to bear should warrant change or whether they choose to withstand that pressure.

The UK Employment Contract is an agreement between two parties where one agrees to work and the other agrees pay for that work. A UK employment contract doesn’t have to be written to be binding. However, any employer who fails to put the terms and conditions of the role of his or her employee in writing can effectively be playing with fire. Employers can leave themselves open to dispute and could, if the problem is incapable of being sorted out amicable, end up being dealt with by a tribunal. This can be very costly and time-consuming.

What can wrong with employment contracts?

Imagine for the sake of argument that you run a small business employing a number of workers. These people have worked for the business but the arrangement is informal, so nothing was ever put down in writing. They claim at some point that they are due for overtime payments dating back several months. The claim is based on a promise they say you made some time ago. You disagree with their contention, and therefore the case proceeds to tribunal. When the case comes to court, the judge will ask for proof of a valid written employment contract, or for the written terms of employment. As the business cannot provide this the chances are the court will find in the employees favour.

How can these situations be avoided?

Employers are obliged under section 1 of the Employment Rights Act, 1996, to provide as a minimum a written statement setting out the main terms and conditions of employment. This isn’t technically the same as a written employment contract, mainly because it doesn’t have to record all the terms and conditions. The statement has to be given to all new employees within two months of work commencing. Any employer who gives an employee such a statement will be looked upon favourably by the courts in cases of dispute, particularly if the employee did not question those terms at the time the statement was issued.

What should be included in a statutory statement of terms?

• the names of the employer and the employee
• the date when the employment (and the period of continuous employment) began
• the level of remuneration and the intervals at which it is to be paid
• the hours of work
• the employee’s holiday entitlement
• the entitlement to sick leave, including any entitlement to sick pay
• details of any pensions and pension schemes
• the entitlement of employer and employee to notice of termination
• the job title or a brief job description
• clarification about whether the employment contract is temporary: if it is, it must state the period for which the employment is expected to continue. If the employment is for a fixed term, it must state the date when it is to end.
• the place of work or, if the employee is required or allowed to work in more than one location, an indication of this and of the employer’s address
• details of the existence of any relevant collective agreements which directly affect the terms and conditions of the employee’s employment – usually referred to in the employee handbook.

What are the advantages of having a properly drafted written employment contract?

A properly drafted written contract adds certainty for both employer and employee. A statutory statement of terms is only evidence of what was agreed, whereas the employment contract itself will contain all the terms. An accurately drafted written contract will provide conclusive evidence about what the terms of employment are.

Many employers will want to insert anti-competition clauses into employment contracts. These are also known as restrictive covenants, and aim to restrict the employee’s activities for a period after their employment ceases: for instance it may preclude them form working for a competitor for a certain period of time, or from contacting any of the employer’s clients. Such clauses can be very effective, but they need to be drafted carefully and precisely. Otherwise they can prove to be impossible to enforce.

In certain industries there may be some disciplinary rules that need to be enforced rigorously. They may be so important that they will need to be written into the employment contract, for example road haulage industries will insist that employees are automatically charged with gross misconduct if they are found to have alcohol in their vehicles or test positive for a banned substance whilst at work.

From an employee’s point of view, having a written employment contract is also beneficial. They will have peace of mind from the outset. They may have to wait two months for the statutory statement, but they’ll know that every relevant term will have been included in the written contract. There may be generous terms like medical insurance or a compensation package to be paid on termination that do not form part of the statement.

The important thing to remember is that written statements and employment contracts have to be prepared and executed with care. Good advice is important, but properly drafted contracts are essential. Many companies now supply UK employment contract templates which make this process much simpler. They are drafted by experts and take all of the worry out of drawing up employment contracts.

How can you avoid employment contract disputes? Sounds as though it should really be relatively straightforward. The simplest way to avoid potential difficulties is to create a robust employment contract framework that sets out the rights and responsibilities of all parties clearly. If an employer draws up a legally binding and correctly drafted employment contract when the contractual arrangement begins, then misunderstandings and confusion will be avoided later. Drawing up an agreement isn’t always easy or affordable. Constructing an employment contract can be time-consuming and often troublesome. It definitely requires expert knowledge, not just of legislation, but also case law.

Consequently employers feel obliged to turn to the services of these experts, but that can present another set of problems. Often the prices charged for drawing up these contracts can be prohibitive, and this can be a particular problem for smaller businesses. However, there is an answer to these problems: a much simpler and more cost-effective solution. Using an employer contract template, along with an employee handbook, can help to avoid future disputes and misunderstandings. The beauty of these templates is that they are drawn up by qualified lawyers, and yet are easily-customisable for every type of employment and circumstance.

So what type of information will UK employment contract templates contain?

There aren’t any formal rules about drawing up a legally binding employment contract. There’s certainly no requirement for the contract to cover every single aspect of all the terms and conditions: well, not initially at least. However, any written statement of employment particulars has to contain a certain amount of minimum information for it to be binding. It should contain:

• the names of the employer and the employee
• the date when the employment (and the period of continuous employment) began
• the level of remuneration and the intervals at which it is to be paid
• the hours of work
• the employee’s holiday entitlement
• the entitlement to sick leave, including any entitlement to sick pay
• details of any pensions and pension schemes
• the entitlement of employer and employee to notice of termination
• the job title or a brief job description
• clarification about whether the employment contract is temporary: if it is, it must state the period for which the employment is expected to continue. If the employment is for a fixed term, it must state the date when it is to end.
• the place of work or, if the employee is required or allowed to work in more than one location, an indication of this and of the employer’s address
• details of the existence of any relevant collective agreements which directly affect the terms and conditions of the employee’s employment – usually referred to in the employee handbook.

Additional information must be included if the employee is expected to work outside the UK for more than one month. The statement must also provide certain details of the employer’s disciplinary and grievance procedures, and state whether or not a pension’s contracting-out certificate is in force.  All the required particulars of employment must be given to the employee within two months of the date when the employment begins. If required, the information does not have to be given all in one document at the same time. Instead, it can be given in separate documents or instalments if this is more convenient, provided that certain particulars are collected together in one single instalment, referred to in employment legislation as the ‘principal statement’.

So what information will staff handbook templates contain?

A staff handbook sets out the framework for the whole employment relationship and formalises much of the information already contained in the employment contract. It promotes a better understanding between the parties and reduces the possibility of confrontation at a later date. Most staff handbooks will list both company policies and procedures and provide additional information for all employees about their rights and responsibilities. They normally include the following information:

• capability procedures
• disciplinary procedures
• grievance procedures
• maternity leave policy
• parental leave policy
• paternity leave policy
• time off for dependents policy
• adoption leave policy
• flexible working policy ( if applicable)
• equal opportunities policy
• anti-harassment and bullying policy
• electronic communication and internet access policy
• data protection policy

All businesses own data that they would consider to be integral and vital to current and future business success. Restricting the use of this information by employees after the termination of their employment contract can protect the business. A previous employee with knowledge of technology, strategic information or customers and clients may be an attractive asset to a competitor.

An employer may protect the use of this information both during employment and after by including a restrictive covenant in the contracts of employment of senior or highly skilled staff at the start of the employment relationship. Express restraints may deter employees from joining competitors.

A restrictive covenant is usually a clause in a UK employment contract which prohibits an employee from competing with his ex-employer after the employee has left the business. It may also prevent the ex-employee from soliciting or dealing with customers of the business by using knowledge of those customers gained during his former employment.

The starting point for any such post-termination restriction is that it is void on the grounds of illegality. It follows that an employer generally is not entitled to protect himself against competition from his ex-employees. However, if the ex-employer can convince a court that the covenant in the original employment contract is designed to protect his legitimate business interests; and that it extends no further than is reasonably necessary to protect those interests. It will probably be upheld and enforced.

Types of restrictive covenants in UK employment contracts

Standard types of restrictions:

• non-competition covenants – restrictions on the former employee working in similar employment for a competitor;
• non-solicitation covenants – which prevent poaching of clients/customers/suppliers of the former employer;
• non-dealing covenants – which prevent a former employee from dealing with former clients/customers/suppliers, regardless of which party approached the other;
• non-poaching covenants – which prevent an employee poaching former colleagues.

If an employment contract restrictive covenant is to be enforceable, it cannot be drafted too widely. It will be for the employer, in the event of a clause being challenged, to show that the clause is justified and sufficiently narrow. To meet these criteria an employer must bear in mind certain factors:

• The breadth of the geographical area of any restriction and length of time of the post termination restriction must be justified. It is unlikely that a wide geographical area will be justified and, as a general rule, a restriction for more than 6-12 months will be difficult to justify.
• Regard will also be had to the type of interest being protected, for instance, information such as trade secrets may be granted wider protection than customer information, given that its potential use across markets is wider.
• An employer may also be required to provide evidence of any connection between the employee and any information that is being protected.

The extent of clauses, therefore, must be relative to the employee’s position within the business. As more senior employees will be in contact with more sensitive information, restrictions placed upon them may be justified as being more onerous. Overall, a one-size fits-all policy on restrictive covenant clauses risks the clause becoming unenforceable.

Restrictive covenants may also require periodic review in order to maintain their enforceability as the covenant is judged at the time it was entered into, that is, at the start of the employment contract.

Gardening Leave 

Gardening (or Garden) leave is commonly used in conjunction with restrictive covenants for maximum impact. Including a garden leave clause in an employment contract allows an employer to require an employee to spend all or part of the notice of termination period at home. In return for this the employer will continue to pay his or her usual salary and benefits.

The benefit of a gardening leave clause is that it stops the employee from taking up other employment with a competitor, and enables the employee’s successor the chance to establish themselves in post. The employee is also no longer privy to the company’s confidential information and whatever information they do have will become out of date.

Gardening leave must be created expressly by a clause in the employment contract and is also subject to a test of reasonableness with regard to its duration.